MONTPELIER — With the technology still not cooperating, officials in charge of Vermont Health Connect said Tuesday that small businesses still needing to sign up for health insurance by April 1 will do so through insurance carriers, not the exchange website.

The announcement by Mark Larson, commissioner of the Department of Vermont Health Access, is another setback for the troubled Vermont Health Connect site. It has struggled since its Oct. 1 launch to meet the needs and expectations of Vermonters.

Because the site could not process small business applications, Gov. Peter Shumlin allowed small businesses to extend 2013 plans into the first quarter of 2014.

The administration also allowed small businesses to enroll directly through the state’s two insurance carriers — Blue Cross Blue Shield and MVP Health Care.

The site, despite months of work by the state’s main contractor, CGI, is still not fully functional. As a result, Larson said Tuesday that all small businesses still needing to enroll in health care coverage will do so directly through insurance companies.

“Obviously we’re disappointed to not be able to announce that our small business functionality is ready,” Larson told reporters.

“But, again, we believe that the opportunity to directly enroll through Blue Cross and MVP into a Vermont Health Connect plan is a pathway to Vermont Health Connect. We believe that it is at this point a proven pathway. Many Vermonters have already done it.”

Vermont is the only state that has mandated coverage for individuals and small businesses on a state exchange. The exchanges themselves are mandated by the federal government under the Affordable Care Act, also known as Obamacare.

Larson said work on fixing the Vermont site will continue, but officials gave no indication Tuesday when the small business functions will be working.

“While we have been continuing our testing and making progress with the testing around our small business functionality, it is not ready today, and we felt like this decision provided the clearest path for those employers that have to make important decisions about their coverage for employees in 2014,” he said.

Larson said he did not know the number of businesses or employees that will be affected.

He also gave no indication when the online payment function will go live. Individuals can currently sign up for coverage on the exchange site, but invoices are still being generated on paper and mailed. Payment must be made by check.

The announcement comes just days after officials from the state’s two insurance companies told lawmakers they would need to know within a month or so if the website would be working for small business sign-ups.

Still, Larson said the announcement was made to provide the smoothest transition possible to Vermont Health Connect insurance plans, not to meet any deadline.

“It was really a desire to make an early decision so that we can provide small businesses with predictability and clarity going forward,” he said.

Officials from both insurance companies praised the administration Tuesday for the decision, and the time it will provide to enroll employees into appropriate insurance plans.

Don George, president and CEO of Blue Cross Blue Shield, said his company has about 20,000 small business enrollees working for hundreds of small businesses. He said the administration’s decision now to allow direct enrollment leaves enough time for the company to reach out to each employee.

“It doesn’t have to be rushed,” George said.

Bill Little, vice president of MVP, also noted the importance of providing enough time to ensure that Vermonters do not experience any gaps in coverage.

“They’ve worked very hard to get to where we are today. As noted, there are still some challenges,” Little said. “This really is the right decision, and it will allow a very strong focus on the work that remains.”

Shumlin, while noting his disappointment in CGI, said Friday he remains committed to making sure the company completes the tasks laid out in its $84 million contract with the state.

The federal government will soon replace CGI as the main contractor on the federal site. Vermont is one of 14 states to build its own exchange site and one of six states to choose CGI for the job.

Larson reiterated Tuesday the state’s desire to hold CGI accountable for completing work on the state exchange.

“Our priority right now is to continue to work with CGI to get the work done that Vermonters have contracted for,” he said.

The Shumlin administration has said it will look to recover all penalties from CGI as a result of missed deadlines. Those penalties come to just over $5 million.

Meanwhile, detractors of Vermont Health Connect and reform efforts under the ACA are stepping up their criticism. The Vermont Republican Party launched a website Tuesday, vthealthreport.com, asking people to submit reports electronically about their experiences with the Vermont exchange.

Republicans in the Legislature also criticized the progress of Vermont Health Connect in a news conference Tuesday.

Rep. Doug Gage, R-Rutland, a member of the House Health Care Committee, said the exchange has “dismally failed Vermonters.” If the exchange were a private insurance company, he said, “they would have faced hundreds of thousands of dollars in fines and been barred from conducting business in Vermont.”

Another committee member, Rep. Mary Morrissey, R-Bennington, said Shumlin and Larson “overpromised and under-delivered.” She called for Shumlin to secure a new contractor to complete work on the website.

“As the governor stated last week, CGI underperformed and has missed most deadlines, but the governor refuses to cut ties with CGI,” Morrissey said. “We think it is time to fire CGI and get preferably a Vermont company with IT expertise on board that can fix VHC and get it operating as quickly as possible.”

Republicans again called on Shumlin to drop all coverage mandates for a full year. They also called for a bipartisan working group to oversee the exchange site and for completion of a household survey to determine insurance coverage among Vermonters.

Darcie Johnston, head of Vermonters for Health Care Freedom and a persistent critic of the Shumlin administration’s reform efforts, also urged the state to drop the mandate for coverage on the exchange.

“We believe what is best for small businesses is a voluntary exchange,” she said. “The failure of Vermont Health Connect and the uncertainty that’s been put on these businesses — we’re mystified as to why Gov. Shumlin wants to continue to penalize businesses.”

The state Republican Party also criticized the Shumlin administration Tuesday for using a Nebraska-based firm to generate invoices and process premium payments.

A Vermont Health Connect spokeswoman said the state has contracted with Benaissance, located in Omaha, for that work. Benaissance was selected through the state’s competitive bid process and is a subcontractor for CGI.